| Click for the Finfacts Ireland Portal Homepage |

Finfacts Business News Centre

Home 
 
 News
 Irish
 Irish Economy
 EU Economy
 US Economy
 UK Economy
 Global Economy
 International
 Property
 Innovation
 
 Analysis/Comment
 
 Asia Economy

RSS FEED


How to use our RSS feed

Follow Finfacts on Twitter

 
Web Finfacts

See Search Box lower down this column for searches of Finfacts news pages. Where there may be the odd special character missing from an older page, it's a problem that developed when Interactive Tools upgraded to a new content management system.

Welcome

Finfacts is Ireland's leading business information site and you are in its business news section.

Links

Finfacts Homepage

Irish Share Prices

Euribor Daily Rates

Irish Economy

Global Income Per Capita

Global Cost of Living

Irish Tax - Income/Corporate

Global News

Bloomberg News

CNN Money

Cnet Tech News

Newspapers

Irish Independent

Irish Times

Irish Examiner

New York Times

Financial Times

Technology News

 

Feedback

 

Content Management by interactivetools.com.

News : EU Economy Last Updated: Jun 25, 2014 - 11:41 AM


German consumer sentiment at highest in more than seven years
By Finfacts Team
Jun 25, 2014 - 8:42 AM

Email this article
 Printer friendly page

German consumer sentiment rose to its highest level in more than seven years in June , in contrast with Tuesday's downbeat Ifo business confidence index.

GfK, the market research firm, said today that the ECB's renewed cut of its key interest rate to 0.15% and its introduction of a penalty rate on bank deposits placed with the central bank have provided an important boost to the consumer climate in Germany and been a significant factor in the indicator rising this month. This fiscal policy decision has had a strong negative impact on the propensity to save. The improvement in willingness to buy is also at least partially attributable to this factor. In contrast, there was almost no change in income expectations, with the indicator only falling slightly.

Economic expectations: climb to three-year high: The economic outlook of Germany is currently in brilliant shape. In June, the indicator increased by 7.7 points to 46.2 points. This is the highest value since June 2011, when it reached 50.3 points exactly three years ago. The upward trend in the economic indicator has therefore been consolidated.

Following a robust start to 2014 for the German economy, the current focus of consumers in view of economic developments is predominantly on general domestic conditions such as labor market situation, propensity to invest and inflation. There are clear positive signs in these areas and gross domestic product (GDP) is expected to grow by around 2% this year. The recently published forecasts by economic experts also suggest that this will be the case.

However, GfK says that the development of international crises, including in Iraq, Syria and Ukraine, continues to be an unpredictable risk factor for the economy. A distinct escalation of the troubles in these countries would also be likely to affect the economic mood in Germany. Companies in Germany evidently also fear a worsening of the international situation. Accordingly, the Ifo Business Climate Index fell slightly in June.

Income expectations: almost unchanged: Income expectations almost sustained its extremely good level in June. The income expectations indicator only dropped by 0.6 points and is currently at 47.2 points. It is therefore only just over five points below the highest value since reunification that was reached in April this year. When compared with the same period of 2013, this equates to an increase of 11 points.

A key aspect supporting the income outlook is that collective wage agreements have resulted in income gains, which equate to increases in real terms in view of the falling rate of inflation. The continued positive labor market situation also offers scope for salary and wage increases, which leaves German employees with considerably more in their wallets than was the case over the last few years.

Pensioners are also benefiting from this good development in salaries. According to information from pension insurance institutes, statutory pensions will be increasing by around 1.7% in West Germany and around 2.5% in the new federal states from 1 July 2014. After many years of freezes, meaning a cut in real terms, this news is certainly pleasing to pensioners.

Willingness to buy: slight increase: Following only a very slight rise in the previous month, willingness to buy improved more markedly in June. After an increase of 3.7 points, the indicator is now at 53.2 points. This marks growth of almost 17 points on the same period of the previous year.

The propensity to consume is therefore sustaining its extremely stable condition. The trend has currently even turned upward again. As in the previous months, the good framework conditions in Germany, including employment, income development and inflation, determine the consumer sentiment on an ongoing basis.

The decision of the ECB to once again reduce interest rates has been an additional factor that stimulated willingness to buy this month. This move caused the propensity to save to truly plummet in June, which has clearly been to the benefit of the spending mood. 
 
These findings are extracts from the “GfK Consumer Climate MAXX sur-vey”, which is based on around 2,000 consumer interviews conducted each month on behalf of the European Commission.

Related Articles
Related Articles


© Copyright 2011 by Finfacts.com

Top of Page

EU Economy
Latest Headlines
Spain's strong recovery to slow in the next few years
Italy's Mezzogiorno is Achilles' heel of Euro Area - lowest birth rate since 1862
Euro Area GDP grows at weak 0.3% in Q2 2015
German GDP up 0.4% in Q2 2015; France's GDP stagnates
Germany's Surplus: Lots of critics; Credible solutions scarce
Euro Area industrial production dips in June and May after a flat April
Greece faces two years of recession according to EU officials
High EU youth unemployment rate not as bad as it seems
Eurozone retail PMI surges to highest since January 2011
ECB monetary policy still tight for Southern Europe
German exports fell in June — surplus at record; Exports up 13.7% year-on-year
Eurozone manufacturing sector continued to expand in July
Weak euro unlikely to have significant impact on Euro Area growth
Is Euro Area Ireland's top trading partner?: EU28 is overwhelmingly UK's
German car firms boost exports from Spain, UK, Portugal, Czech Republic, Slovakia, Hungary and Romania
Flash Eurozone manufacturing/ services PMI close to four-year high despite Greek crisis
Krugman calls euro a Roach Motel; Hotel California gets 1-star grade
Greece & Euro Crisis: July 2015 articles from Finfacts
Greece and other poor countries in Euro Area will not become rich
Euro Area manufacturing/ services PMI hits four-year high in June
Western European car market: Recovery continues
Greece could become a failed state like Venezuela
Multinational companies pay on average 30% less tax than domestic competitors in EU
EU's list of 30 tax havens omits the biggest 4 in Europe
China to invest in Juncker's European investment fund
Greek talks collapse; Game theorists gambling with future — Germany's vice-chancellor
German exports and industrial production in strong rises in April
Tackling Inequality: Scandinavian countries have the most successful welfare systems in Europe
Eurozone unemployment fell by 130,000 in April 2015 — down 849,000 in 12 months
Eurozone service sector business activity slowed during May
German 2015 GDP forecast cut; Jobless level at 24-year low
Eurozone manufacturing in modest acceleration in May
FDI into Europe at record in 2014; UK on top: Germany location for future investment
Eurozone economy loses growth momentum; Jobs growth rises
Athens leak suggests Juncker has plan for Greece
Draghi will not end QE early but warns of risks
Eurozone grows faster than US and UK in Q1 2015
German GDP at slower pace, France faster in Q1 2015
Germany may cut income tax; Germans still shun risky investments
Germany had record exports and imports in March 2015